Cost accounting: An institutional yardstick for measuring British entrepreneural performance, circa 1914

              Robert R. Locke UNIVERSITY OF HAWAII
COST ACCOUNTING AN INSTITUTIONAL YARDSTICK FOR MEASURING BRITISH ENTREPRENEURAL PERFORMANCE, CIRCA 1914
Abstract: This article, like that published in the spring issue, again finds fault with recent attempts by economic historians to rehabilitate the reputation of the late Victorian and Edwardian entrepreneur. It argues that, since after 1880 cost ac-counting became a "necessary" technology for good entrepreneurial performance, the revisionist economic historians' failure to consider institutional factors, like cost accounting, has led them to overlook elements essential to an appraisal of comparative entrepreneurial performance. The growing inferiority of British cost-ing methods, as opposed to American and German, moreover, meant a relative British entrepreneurial failure.
In the first part of this essay, published in the spring issue, recent negative opinions about the quality of British entrepreneurial per-formance, circa 1914, were criticized from a cost accounting point of view.1 In this article attention shifts to the institutional basis of entrepreneurial activity. Although the revisionists historians under discussion are ostensibly preoccupied with the entrepreneur they really have ignored the effect of environment upon his operations. They have done this, moreover, even when the results of their own studies indicate that the subject should be investigated. Roderick Floud, in his study of Greenwood and Batley, observed, for example, that the character of the company's accounting system
makes it impossible to measure the capital inputs, and therefore, the cost of such inputs, making it impossible to approach directly either the extent of, or the cost of factor substitution in the form of the use of capital rather than labor.2
If Floud could not measure these inputs could Greenwood & Batley? Floud never tries to answer such a question. This is un-fortunate because, again as Floud noted, quoting a contemporary source, the firm's financial record was "simply disastrous."3 There is something incongruous about saying that a firm had, at the same